‘RBI to issue draft report on relaxing external borrowings’

New Delhi: Economic affairs secretary Shaktikanta Das on Wednesday said the Reserve Bank of India would soon issue a draft report on liberalising External Commercial Borrowings (ECBs) on which the government was holding discussions with the RBI.

Speaking at an investor summit here, Das said the government was also discussing ways to further relax the sectoral caps on foreign direct investment.

In January this year, the RBI made changes to the ECB norms under which authorised money changing banks are allowed to create a charge on securities. The decision was taken with a view to liberalise and expand the options of securities.

ECB is a significant component in India’s external debt and key driver of its magnitude. It has made up the highest share in India’s external debt over the years.

By the end of the last fiscal, ECBs had the highest share of 38.2 percent in India’s external debt.

“The rise in commercial borrowings was due to a spike in commercial bank loans and securitised borrowing,” the finance ministry said earlier this year releasing the external debt data for 2014-15.

India’s total external debt at March-end this year was $475.8 billion, up 6.6 percent from the corresponding period a year ago. As a percentage of the gross domestic product (GDP), external debt was 23.8 percent at March-end, up from 23.6 percent in 2013-14.

“A cross-country comparison based on International Debt Statistics 2015 of the World Bank, which presents the debt data for 2013, shows India continues to be among the less vulnerable countries, with its external debt indicators comparing with other indebted developing countries,” the finance ministry said.